Famous Dave’s of America Inc. has sold the franchisor’s Chicago market to a company owned by Elliott Baum, the chain’s franchisee in Ohio and Michigan, the operator said Friday.
Baum will pay $1.15 million, plus the cost of inventory, for the seven locations, according to SEC documents, and has agreed to invest $500,000 in the units and develop another 10 restaurants in Chicago.
“We are excited to refranchise the Chicago market to one of our long-term and very successful franchise partners,” Famous Dave’s CEO Adam Wright said in a statement. “Elliott has also signed an area development agreement and plans to invest in both the existing store base and further develop the market with new restaurant growth.”
Baum has been a Famous Dave’s franchisee since 2003 and owns six locations in Ohio and Michigan.
“I am excited about Famous Dave’s, the company’s future, and the opportunity for market growth,” he said in a statement. “I look forward to working with the existing restaurant team in Chicago and serving award-winning barbecue to our guests.”
Famous Dave’s now owns 44 of the chain’s 180 locations. Franchisees own the remaining 136 units. The company has long been thought to be exploring refranchising. Several activist investors own much of the company’s stock, and activists generally prefer more franchise ownership.
Famous Dave’s company-owned units have significantly underperformed franchisees in recent quarters. In the third quarter of 2015, same-store sales at company-owned locations fell 9.8 percent, while same-store sales at franchised locations fell 3.6 percent.
Famous Dave’s stock has lost 62 percent of its value since reaching a peak of nearly $35 per share in February.
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